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Wal-Mart feels winter chill on sales

Wal-Mart's fourth-quarter results told the same retail story of woe, just on a larger scale. The world's largest retailer said winter storms and a reduction in the government's food-stamp program was to blame for a 0.4% drop in comparable store sales
Newslook

Retailer points to food stamp cuts and cold weather.

Shoppers head in and out of a Walmart store in Rosemead, Calif., last month. On Jan. 31, Walmart said bad weather and cuts in food stamp support for the poor weighed on U.S. sales and would hit earnings for the fourth quarter.(Photo: Frederic J. Brown, AFP/Getty Images)

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Walmart stores have been lagging behind its Sam's Club warehouse stores

Cold, snowy weather in much of the country closed stores, slowed sales

This winter's wrath put a chill on Wal-Mart Store's sales in the fourth quarter, leading to profit of $4.4 billion, a 21% drop, the company said Thursday.

Wal-Mart earned $1.36 a share, down 19% from $1.67 in the same quarter last year. For fiscal 2014 ended in January, the company earned $4.88 a share, a 2.8% decrease over fiscal 2013's earnings per share of $5.02.

Wal-Mart made a series of adjustments to earnings monitored by analysts. After those adjustments, Wal-Mart earned $1.60 a share for the quarter, topping the Wall Street estimate of $1.59 a share. For the year, adjusted earnings finished at $5.11 a share, beating the $5.10 a share estimate.

The numbers were in line with estimates when adjusted for one-time items, "so Q4 was fine," said Brian Yarbrough, a consumer research analyst at Edward Jones.

Also Thursday, Walmart doubled its plan to open small stores during fiscal year 2015 to 270 to 300 of its Neighborhood Market stores.

Wal-Mart also said its board approved a 2% increase in the annual cash dividend for fiscal year 2015 to $1.92 per share. The dividend will be paid in four quarterly installments of $0.48 per share.

Wal-Mart warned in late January that its fourth quarter would be hit hard by weather woes and reductions in food stamp benefits.

But the world's biggest retailer has other challenges. Walmart is losing market share to dollar stores and grocer Kroger, which tries to compete with Walmart on price, something not all chains have attempted, Yarbrough says. Walmart sales in grocery were negative again compared to some of its major competition, which have seen sales increases, Yarbrough said.

While sales in clothing and home products were good, "We believe they have some work to do on the grocery side of the business," Yarbrough said.

And dollar stores have other benefits, too, he says.

"Something tells me people are more into convenience right now," says Yarbrough. "You can get in and out of a dollar store in two to three minutes, about the time it takes to walk from your car into a Walmart."

The increase in planned openings of small stores, while tiny when compared to Walmart's mammoth overall footprint, helps the chain compete with dollar stores, Walmart said, especially in areas where consumers are especially sensitive to fuel prices. Besides, Walmart's small-store sales are also about four to seven times what dollar stores' are, said Simon.